AIM Renews Call to Freeze Unemployment Insurance Rates

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AIM Renews Call to Freeze Unemployment Insurance Rates

Economy HR & Employment Law News | March 1, 2021
By: Vasundhra Sangar

Associated Industries of Massachusetts is again calling for immediate passage of state legislation designed to shield employers from a potentially disastrous 60 percent increase in unemployment insurance (UI) rates this month.

The legislation (H.55) would impose a two-year schedule freeze on employer UI rates at Schedule E for both 2021 and 2022, and allow the state to bond the remaining deficit in the state Unemployment Trust Fund to pay back more than $2.2 billion in federal advances required to meet  the overwhelming demand in COVID-19 benefit claims.

AIM has presented the Massachusetts Legislature with three pieces of written testimony highlighting the importance of this legislation and the need to protect Massachusetts employers from suffering even heavier losses to their current budgets and workforces rather than requiring them to refinance a state Trust Fund exhausted by a national public-health emergency.

“If economic recovery is the goal, we cannot allow the employer community to shoulder the unprecedented hits to the state’s UI system in real time,” said Brooke Thomson, AIM’s Executive Vice President for Government Affairs. “Bringing people back to work is an immediate priority for AIM members and policymakers in the State House. Doing so will be virtually impossible, however, if money that can and should be used towards paychecks and employee benefits is diverted to the depleted Trust Fund instead.”

The Massachusetts Department of Unemployment Assistance’s (DUA) November 2020 UI Trust Fund Report projects that the Fund, primarily financed by direct and reimbursing employer contributions, will be in the red by $5 billion at the end of 2022 and remain insolvent by several billion at the end of 2024. These initial numbers left unchecked would trigger an increase from the current 2020 employer tax rate of Schedule E, or $539 per employee, to Schedule G, about $866 per employee, reflecting an almost 60 percent increase. H.55 would freeze the employer tax rate at Schedule E for the next two years, slowing annual employer contribution growth to about $635 in 2021 and $665 in 2022.

“We are grateful for the work the Legislature has already done to shield employer experience ratings from the onslaught of COVID-19 unemployment claims,” Thomson continued. “AIM remains committed to ensuring timely UI claims are made available in Massachusetts as they have been throughout their history. It is equally important to provide employers the  clarity they need, especially in these times, to plan for the financial future of their business and their workforce.”

The Department of Unemployment Assistance (DUA) has a narrow time frame in which to issue unemployment rate statements (bills) to the commonwealth’s employers for the first quarter of 2021. AIM has been in regular communication with leadership in the House and Senate to promote passage of the bill as time runs out before initial statements are due out in March.

Members of the Massachusetts House of Representatives and Senate looking for additional information, or a copy of AIM’s letter to the House and Senate, please contact Brooke M. Thomson, EVP for Government Affairs. 

To learn more about AIM’s Unemployment Insurance committee and how to engage elected officials regarding this issue as it moves towards a public hearing and next steps for legislative actions please contact membership@aimnet.org or sign up for updates directly by updating your preferences online. 

Click here to learn more about AIM’s work on unemployment insurance issues at the state and federal level.   

To learn how you can help AIM advocate more about Unemployment Insurance, please contact: Brooke Thomson at: bthomson@aimnet.org.